king west pharmaceuticals is experiencing with a new affordable AIDS medication, PM-17, that may have the ability to strengthen a victim’s immune system. Thirty monkeys infected with the HIV complex have been given the drug. Researchers intend to wait six weeks and then count the number of animals whose immunological response shows a marked improvement. Any inexpensive drug capable of being effective 60% of the time would be considered a majority breakthrough; medications whose chances of success are 50% or less are not likely to have any commercial potential. Yet to be finalized are guidelines for interpreting results. King West hopes to avoid making either of two errors: (1) rejecting a drug that would ultimately prove to be marketable and (2) spending additional development dollars on a drug whose effectiveness, in the long run, would be 50%or less as a tentative “decision rule,” the project manager suggests that unless sixteen or more of the monkeys show improvement, research on PM-17should be discontinued. A, what are the chances that the “sixteen or more” rule will cause the company to reject PM-17, even if the drug is 60% effective? B, How often will the “sixteen or more” rule allow a 50% effective drug to be perceived as a major breakthrough?
king west pharmaceuticals is experiencing with a new affordable AIDS medication, PM-17, that may have the ability to strengthen a victim’s immune system. Thirty monkeys infected with the HIV complex have been given the drug. Researchers intend to wait six weeks and then count the number of animals whose immunological response shows a marked improvement. Any inexpensive drug capable of being effective 60% of the time would be considered a majority breakthrough; medications whose chances of success are 50% or less are not likely to have any commercial potential. Yet to be finalized are guidelines for interpreting results. King West hopes to avoid making either of two errors: (1) rejecting a drug that would ultimately prove to be marketable and (2) spending additional development dollars on a drug whose effectiveness, in the long run, would be 50%or less as a tentative “decision rule,” the project manager suggests that unless sixteen or more of the monkeys show improvement, research on PM-17should be discontinued.
A, what are the chances that the “sixteen or more” rule will cause the company to reject PM-17, even if the drug is 60% effective?
B, How often will the “sixteen or more” rule allow a 50% effective drug to be perceived as a major breakthrough?
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
